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Chinese Semiconductor Design Firms Partnering with Malaysian Chip Packaging Companies Amidst US Sanction Concerns

In anticipation of potential US sanctions affecting China's semiconductor industry, Chinese companies involved in semiconductor design are strategically forging partnerships with Malaysian chip packaging firms. This collaborative maneuver, specifically focusing on the assembly of high-end graphics processing units (GPUs), signifies a calculated response to the mounting restrictions imposed by the United States on China's accessibility to advanced GPU technologies. The decision to capitalize on Malaysia's semiconductor ecosystem stems from several advantageous factors, including the positive diplomatic relations between the two nations, cost-effectiveness, the availability of a skilled workforce, and access to state-of-the-art equipment.

This collaborative shift holds significant implications for the global semiconductor supply chain. Smaller Chinese semiconductor design firms, facing challenges in securing advanced packaging services domestically, are actively seeking viable alternatives. Malaysia, a pivotal player in the global semiconductor landscape, has emerged as an appealing destination for these Chinese counterparts. Notably, Unisem, a Malaysian chip packaging company majority-owned by China's Huatian Technology, has reported a surge in business activities and inquiries from Chinese semiconductor design companies.

The multifaceted motivation behind Chinese companies' interest in Malaysia extends beyond immediate tactical advantages. It is fueled by the desire to establish resilient supply chain networks, mitigate geopolitical risks, and navigate the evolving dynamics of the global semiconductor industry. Amidst these considerations, Malaysia currently contributes 13% to the global market for semiconductor packaging, assembly, and testing, with ambitious plans to increase this share to 15% by 2030.

Unisem Chairman John Chia emphasizes the legitimacy and compliance of these business dealings, even as concerns linger regarding potential reactions from the United States. It is noteworthy that Unisem's existing customer base in Malaysia predominantly consists of entities from the United States. This collaborative trend underscores the semiconductor industry's adaptability, resilience, and proactive pursuit of strategic partnerships in response to geopolitical uncertainties.

As the semiconductor landscape continues to witness transformative shifts, with other countries such as Vietnam and India positioning themselves as alternative chip manufacturing service providers, the collaboration between Chinese semiconductor design firms and Malaysian chip packaging companies encapsulates a broader industry narrative. This narrative emphasizes the industry's commitment to adapting to geopolitical dynamics, fostering strategic partnerships, and ensuring continued innovation and growth amid evolving global uncertainties.


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